Last week, the financial world held its breath as SVB Financial’s (NASDAQ:SIVB) principal subsidiary Silicon Valley Bank collapsed. A few days later, the dust isn’t even close to settling from the event that shook the market. After the Nasdaq imposed a trading halt on SIVB stock, things quickly escalated as the U.S. government seized control of the struggling company. SVB set the collapse in motion last week when it inadvertently triggered a bank run by announcing an inability to cover its depositors.
Yesterday, depositors breathed a sigh of relief when U.S. regulators announced that they would be able to access any funds the bank had been holding. But it has also come to light that CEO Greg Becker offloaded millions of dollars worth of shares less than two weeks before the announcement that triggered the bank’s downfall.
How Much SIVB Stock Did Becker Sell?
Becker is not listed among SIVB stock’s top shareholders. That’s likely because he recently offloaded more than $3 million in SIVB stock. According to a Form 4 filed Securities and Exchange Commission (SEC), he sold 12,451 shares on Feb. 27 after filing a plan that would allow him to sell them on Jan. 26. This allowed him to walk away with a profit of roughly $3.6 million. At this time, it is unknown if Becker had knowledge of the company’s plan for a new sharing offering to cover its significant losses. However, the timing of the deal is highly suspect. As Bloomberg reports:
“There’s nothing illegal about corporate trading plans like the one Becker used. The plans were set up by the Securities and Exchange Commission in 2000 to thwart the possibility of insider trading. The idea is to avoid malfeasance by limiting sales to predetermined dates on which an executive can sell shares, and the timing could merely have been coincidental.”
That said, critics are already sounding the alarm on Becker’s lucrative SIVB stock trade. Democratic Rep. Ro Khanna recently told the Washington Post that the CEO should return all the funds he made, which should be given to depositors. He added, however, that his criticisms are not intended to allege any wrongdoing on Becker’s part, as some facts of the matter are still coming to light. Professor Dan Taylor of the Wharton School of Business issued a similar take, stating that if Silicon Valley Bank had begun discussing a capital raise before or while Becker maneuvered to sell, it would be “highly problematic.”
What Comes Next
Even if Becker’s actions did not break any federal laws, he will likely be under scrutiny as regulators examine the events surrounding Silicon Valley Bank’s collapse. It is a complicated matter, and regulators are still trying to understand the best course of action as the government weighs further bailout options. This morning, President Joe Biden stated that taxpayer funds would not be used in bailing out either SVB or Signature Bank (NASDAQ:SBNY), which regulators recently shut down due to systemic risk.
Becker hasn’t issued any statements on the sale nor his intentions moving forward. However, the matter is far from settled, and regulators are only just starting to understand the events that brought down Silicon Valley Bank. Its CEO will likely have some difficult questions to answer in the near future.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.